TaxTMI 
TaxTMI 
TaxTMI 
1986 (6) TMI 28
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....of India under the Emergency Risks Insurance Scheme promulgated under the Emergency Risks (Factories) Insurance Act, 1962. Under the said insurance, 80% of the loss suffered by the insured was agreed to be indemnified by the insurer. By its letter dated September 17, 1965, the assessee at the first instance claimed a sum of Rs. 24,47,150. Subsequently, the assessee by its letter dated June 21, 1966, enhanced its claim to Rs. 24,95,954. The Government of India, the insurer, accepted the initial claim of the assessee for Rs. 24,47,150 on the following terms and conditions: (a) The Government of India would be entitled to retain the said vessels if the same were received back from the Government of Pakistan. (b) In case the Government of India received the vessels back, the assessee would accept the same back along with the reduced insurance amount which the assessee might, in such circumstances, be entitled to. The assessee accepted the said terms and conditions on July 20, 1966. The assessee received payment of half of its accepted claim on account on July 20, 1967. The balance of the claim was paid and received by the assessee on July 16, 1968. In the assessment year 1969....
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....ount to their destruction. The assessee relied on the dictionary meaning of the words "discard " and " destroy". The Tribunal accepted the contentions of the assessee. On a consideration of the dictionary meanings of the words " discard " and " destroy ", the Tribunal held that the expression " destroyed " involved physical destruction of the assets and not merely the destruction of the rights in the assets. The Tribunal held further that the discarding must be a voluntary act and in the instant case, there was no voluntary discard by the assessee. The Tribunal concluded that section 41(2) of the Act was not applicable in the facts and no profit within the meaning of the said section could be included in the taxable income of the assessee. On an application of the Revenue under section 256(1) of the Income-tax Act, 1961, the following question has been referred as a question of law arising out of the order of the Tribunal for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the provisions of section 41(2) are not applicable in the instant case and in that view deleting the addition of Rs. ....
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....ned advocate for the Revenue cited the following decisions : (a) CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 (SC). This well-known decision was cited for the proposition that where a question of law involved more than one aspect, it was open to the parties in reference to agitate all such aspects irrespective of the fact whether the same had been argued before the Tribunal or not. (b) CIT v. Engineering Works of India (P.) Ltd. [1977] 108 ITR 11. Here, a Division Bench of this court held that where the assessee had received an amount from the insurance company on account of partial destruction of his assets by fire, to the extent the said amount exceeded the written down value of the assets, it would not be considered to be profits under section 41(2) of the Act. The learned judges considered the dictionary meaning of the expression " destroy " and held that, in view of the ordinary meaning of the word, section 41(2) of the Act would not apply to items which were not fully destroyed. (c) CIT v. Sirpur Paper Mills Ltd. [1978] 112 ITR 776 (SC). In this case, the assets of the assessee, viz., building, plant and machinery were covered by insurance against fire. The s....
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....n, and the Shorter Oxford Dictionary , 3rd edition, which read as follows: Webster : " Destroy: 1. to demolish, to tear down: as, to destroy a house, to destroy a city. 2. to ruin : to bring to naught; to spoil completely; as to destroy scheme, to destroy a government, to destroy one's happiness. 3. to take away the utility of; to make useless. 4. to put an end to: to do away with. 5. to kill. 6. to neutralise the effect of. 7. to confute : to disprove." Oxford : " Destroy: 1. To pull down or undo, as a building; to demolish. 2. To lay waste; to ruin; 3. To undo, break up, reduce into a useless form, consume, or dissolve. 4. To deprive of life: to kill, 5. To put end to; to do away with. 6. To counteract. " Learned advocate also submitted that there was no discard by the assessee of its assets in the instant case. Assets were taken over by the Pakistan authorities without any consent or co-operation from the assessee and the assessee had no choice in the matter. In the facts and circumstances of the instant case, it appears that section 41(2) would be applicable only where as a result of sale, discard, demolition or destruction of an asset, moneys p....